What drives your dealership employees? Factors like culture, appreciation, and work-life balance matter. But, let's face it – they're there to earn a living. A great pay plan aligns your dealership's goals with your employees' earnings. They care most about what they take home to their families.
You’re speaking two different languages
Management language often centers on profit and loss statements since they showcase growth and profit. But, "profit and loss" isn't part of your employees' pay plan, right? Here is where we see a disconnect. Giving reports without a clear tie to their pay is like speaking English to a team fluent in Japanese. It doesn't resonate. It doesn't motivate. Speaking in reports means miscommunication with your commissioned staff.
What information impacts performance?
If you want to motivate and empower your staff, generating more reports is not the solution. Unless those report figures tie directly to their pay. Research proves this over and over again. Clarity about earnings is key to unlocking your team's potential.
Clarity is 3x as important as the type of pay plan.
A classic Harvard Business Review study found that clarity is 50% more important for motivation than personality and nearly three times as important as the type of pay plan. So why is clarity so important in determining motivation?
- Clarity in Performance Goals and Incentives: Other studies show that clear performance goals and incentives improve commissioned employees' performance. Employees who see clear expectations and rewards tend to be more motivated. They focus on achieving those goals.
- Communication and Transparency: This research suggests that clear communication and transparency on earnings can greatly impact commissioned employees' performance. Employees informed of their potential earnings learn how their performance turns into income. This keeps them engaged and motivated to perform well.
- Psychological Factors: Psychology studies show the importance of clarity and transparency. They reduce ambiguity and anxiety among commissioned employees. When employees know their earning potential and how to achieve it, they have less stress. They can better focus on their performance.
- Employee Satisfaction and Retention: Clear earnings potential is also linked to higher employee satisfaction and retention. Don't you think employees who see fair pay and a clear path to earning more are more likely to stay with the company? Stay tuned for more on this and an article on developing pay plans for career paths.
Everyone Can Win...
Guess what? Research also shows that clear earnings potential helps the whole organization. It makes staff stay longer. Each department in your dealership wins by providing more transparency and clarity to your staff. Clear earnings are a win-win scenario for both you and your employees.
Assessment and Ideas for Improvement
So, where do you start assessing if you are giving your employees the clarity they need to thrive? Start by talking to your employees. Understand if they can translate the information you provide into their take-home pay. If there's a lack of clarity, take steps to rectify it:
- Build Custom Reports. Create reports tailored to each employee's needs. Be sure to provide the critical data on their earnings that they want to see.
- Update Pay Plans. Align them with the reports you generate. This will ensure they are clear and simple.
If you want ideas to improve pay plans, check out our article: dealership pay plans that get results.
